Underlying iron ore prices showed signs of recovery on Monday, rising on the back of steel gains following Beijing's announcements of additional stimulus for economic growth.
The best-selling iron ore on the Dalian Commodity Exchange for January 2020 delivery rose 1.8% to 655.50 yuan (approximately $ 91.90) per tonne after falling 3.6% earlier during the session.
On the Singapore Exchange, October commodity contracts fell 1.1% to $ 85.04 a tonne in the morning, but gained 3.6% at the end of trading.
China's central bank said Friday that it will cut the amount of cash that banks have to keep as reserves for the third time this year, releasing 900 billion yuan of liquidity to support the weakening economy.
Meanwhile, China's exports fell as expected in August, as shipments to the United States fell sharply, indicating the world's second largest economy is dependent on exports and underscoring the urgent need for additional stimulus as the Sino-US trade war escalates.
Iron ore futures traded lower in the early hours of the session after news of steel imports in China rose to a 19-month high in August, further evidence of a continuing rebound from recent supply-side concerns.
China has increased its imports of iron ore in anticipation of accumulation ahead of China's national holidays in early October. However, price volatility reflects continued concerns about the outlook for demand.
“We remain cautious about iron ore prices in September in light of the still uncertain trade outlook ... but we are not seeing as sharp a drop as we saw in August,” commented Edward Meir, consultant on commodities at INTL FCStone brokerage in London.
